{"id":46024,"date":"2026-01-27T14:15:59","date_gmt":"2026-01-27T14:15:59","guid":{"rendered":"https:\/\/www.simplybusiness.co.uk\/?post_type=knowledge&#038;p=46024"},"modified":"2026-01-27T14:16:28","modified_gmt":"2026-01-27T14:16:28","slug":"employment-rights-act-reforms-cut-costs","status":"publish","type":"knowledge","link":"https:\/\/www.simplybusiness.co.uk\/knowledge\/staff\/employment-rights-act-reforms-cut-costs\/","title":{"rendered":"Employment Rights Act reforms could save businesses billions"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">The UK government\u2019s workers\u2019 rights reforms, introduced through the revised <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/staff\/employment-rights-bill\/\" data-type=\"knowledge\" data-id=\"26327\" >Employment Rights Act<\/a>, have now become law \u2013 but in a notably scaled-back form after extensive parliamentary negotiation.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">While the changes still represent one of the most significant updates to employment law in years, recent compromises have reduced the immediate financial impact on businesses compared with earlier proposals.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here\u2019s what it means for small business owners.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-has-changed-and-what-was-scaled-back\">What has changed (and what was scaled back)?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A major talking point throughout the legislative process was the proposal to give employees unfair dismissal protection from day one of employment. After pushback from business groups, this was replaced with a six-month qualifying period \u2013 a compromise designed to ease pressure on employers, particularly around probation and staff turnover.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Other headline reforms set to go ahead include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\"><strong>day-one <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/staff\/ssp-rate-how-much-is-statutory-sick-pay\/\" data-type=\"knowledge\" data-id=\"1222\" >statutory sick pay<\/a> (SSP) \u2013<\/strong> workers will be eligible from their first day of illness, and the lower earnings threshold will be removed<\/li>\n\n\n\n<li class=\"wp-block-list-item\"><strong>day-one parental and <a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/allowances\/self-employed-paternity-pay\/\" data-type=\"knowledge\" data-id=\"825\" >paternity leave rights<\/a> \u2013<\/strong> removing existing length-of-service requirements for eligibility<\/li>\n\n\n\n<li class=\"wp-block-list-item\"><strong>stronger protections for industrial action \u2013<\/strong> including extending unfair dismissal protections for striking workers beyond the current \u2018minimum service levels\u2019 (which has already been removed)<\/li>\n\n\n\n<li class=\"wp-block-list-item\">establishment of a Fair Work Agency to oversee rights like holiday and sick pay<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Further changes will continue to roll out through 2026 and 2027, including rules that make \u201cfire and rehire\u201d practices automatically unfair, new liabilities for employer responsibilities around workplace harassment, and longer employment tribunal time limits.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Employers must also prepare for mandatory consultation on tipping policies and evolving requirements on shift cancellations and flexible working responses.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-it-means-for-small-businesses\">What it means for small businesses<\/h2>\n\n\n\n<div id=\"nba-body-001\">\n<\/div>\n\n\n\n<p class=\"wp-block-paragraph\">The government estimates the net cost of the reforms at around \u00a31 billion for UK businesses \u2013 significantly lower than earlier projections of \u00a35 billion \u2013 but business bodies warn that this may understate the real cost, due to administrative and compliance time.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For small business owners, this means two key priorities:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li class=\"wp-block-list-item\">Review HR policies and contracts now to make sure you\u2019re complying with upcoming day-one rights and procedural changes.<\/li>\n\n\n\n<li class=\"wp-block-list-item\">Plan for additional payroll costs and administrative burden associated with expanded sick pay, parental rights, and potential tribunal claims.<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">In conclusion, while the final version of the bill is less disruptive than first imagined, it still marks a significant shift in employment law. The phased rollout of the Employment Rights Act gives businesses some breathing room \u2013 but early preparation will help reduce disruption and unexpected costs as the changes take effect.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">More guides for employers<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"wp-block-list-item\"><a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/staff\/what-is-a-staff-handbook\/\" data-type=\"knowledge\" data-id=\"1058\" >How to write a staff handbook: a guide for small businesses<\/a><\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/staff\/ern-number\/\" data-type=\"knowledge\" data-id=\"1383\" >What is an Employer Reference Number (ERN)?<\/a><\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/business-tax\/employer-national-insurance\/\" data-type=\"knowledge\" data-id=\"27179\" >Employer National Insurance: rates and thresholds for small businesses<\/a><\/li>\n\n\n\n<li class=\"wp-block-list-item\"><a href=\"https:\/\/www.simplybusiness.co.uk\/business-insurance\/faq\/what-does-employers-liability-insurance-cover\/\">What does employers\u2019 liability insurance cover?<\/a><\/li>\n<\/ul>\n\n\n\n<div id=\"nba-upsell-001\" class=\"wp-block-group has-azure-200-background-color has-background has-global-padding is-layout-constrained wp-container-core-group-is-layout-94e519ba wp-block-group-is-layout-constrained\" style=\"padding-top:var(--wp--preset--spacing--80);padding-right:var(--wp--preset--spacing--40);padding-bottom:var(--wp--preset--spacing--80);padding-left:var(--wp--preset--spacing--40)\">\n<h3 class=\"wp-block-heading has-text-align-center\">Ready to set up your cover?<\/h3>\n\n\n\n<p class=\"has-text-align-center wp-block-paragraph\">As one of the UK&#8217;s biggest <a href=\"\/business-insurance\/\" data-type=\"page\" data-id=\"5152\" >business insurance<\/a> providers, we specialise in <a href=\"\/business-insurance\/public-liability-insurance\/\">public liability insurance<\/a> and protect more trades than anybody else. Why not take a look now and build a quick, tailored quote?<\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-a89b3969 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/quote.simplybusiness.co.uk\/business\">Start your quote<\/a><\/div>\n<\/div>\n<\/div>\n\n\n\n<div id=\"nba-body-end\">\n<\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>We break down the financial impact and key changes of the workers\u2019 rights reforms.<\/p>\n","protected":false},"author":56,"featured_media":46032,"comment_status":"open","ping_status":"closed","template":"","meta":{"sb_hreflang":"","sb_hreflang_url":"","disable_breadcrumbs":false,"sb_breadcrumbs":[],"sb_reviewed_by":"","sb_review_date":"","sb_enable_content_gating":false,"footnotes":""},"categories":[342,110],"hidden-category":[],"coauthors":[24],"class_list":["post-46024","knowledge","type-knowledge","status-publish","has-post-thumbnail","hentry","category-staff","category-business-news"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.2 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Employment Rights Act reforms could save businesses billions - Simply Business UK<\/title>\n<meta name=\"description\" content=\"UK workers\u2019 rights reforms are changing employment law \u2013 but what will they cost small businesses? We break down the financial impact and key changes.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/staff\/employment-rights-act-reforms-cut-costs\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Employment Rights Act reforms could save businesses billions\" \/>\n<meta property=\"og:description\" content=\"We break down the financial impact and key changes of the workers\u2019 rights reforms.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.simplybusiness.co.uk\/knowledge\/staff\/employment-rights-act-reforms-cut-costs\/\" \/>\n<meta property=\"og:site_name\" content=\"Simply Business UK\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/simplybusiness\" \/>\n<meta property=\"article:modified_time\" content=\"2026-01-27T14:16:28+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.simplybusiness.co.uk\/wp-content\/uploads\/sites\/3\/2026\/01\/employment-rights-act-reforms-cut-costs.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"815\" \/>\n\t<meta property=\"og:image:height\" content=\"543\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:site\" content=\"@simplybusiness\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"3 minutes\" \/>\n\t<meta name=\"twitter:label2\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data2\" content=\"Rosanna Parrish\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.simplybusiness.co.uk\/knowledge\/staff\/employment-rights-act-reforms-cut-costs\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.simplybusiness.co.uk\/knowledge\/staff\/employment-rights-act-reforms-cut-costs\/\"},\"author\":{\"@type\":\"Person\",\"name\":\"Rosanna Parrish\",\"description\":\"Rosanna Parrish is a Copywriter at Simply Business specialising in side hustles \u2013 as well as all things freelance, social media, and ecommerce. 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